M1 Finance vs Wealthfront: Who They're Best For
Wealthfront and M1 Finance are among our favored robo-advisors with Wealthfront winner of the Best Goal Planning and Best Overall categories. Not to be outdone, M1 Finance wins the Best Low Fee and Best for Sophisticated Investors designations. There are sufficient differences to make your choice clear-cut between these two. If you lack the $500 minimum, for example, M1 Finance will be the obvious choice. It is also the choice for investors who prefer to invest in individual stocks, ETFs, and select among customized portfolios.
That said, Wealthfront is our top all digital robo-advisor due to a basket of features such as well-diversified Core portfolios, options to diversify with crypto funds, and 200+ ETFs. Wealthier investors can access risk parity, single stock indexing, and smart beta portfolios. The daily tax-loss harvesting is a financial win for those with taxable accounts. Read on to learn the similarities and differences between these two digital investment managers.
On June 7, 2023 Wealthfront announced the launch of its Automated Bond Portfolio. A first of its kind, the portfolio features a 5.48% blended 30-day SEC yield (net of fees), and is designed to provide a higher yield and more liquidity than a variety of popular fixed-income products.
- Account Minimum: $100 ($500 minimum for retirement accounts)
- Fee: 0%
- Investors can select from more than 80 customized portfolios for retirement, income, growth, hedge-fund, and other strategies
- Do-it-yourself investors will find individual stock and ETF investing
- M1 Plus members enjoy a high-yield cash account and lower lending rates
- Clients benefit from fee-free investment management and no trading charges
- Account Minimum: $500
- Fees: 0.25% for most accounts, no trading commission or fees for withdrawals, minimums, or transfers.
Fund your first taxable Investment Account and get a $50 bonus.
- Ideal for those seeking a well-diversified portfolio and the opportunity to customize with additional ETFs and cryptocurrency funds
- Daily tax-loss harvesting can save money at tax time
- Those interested in borrowing can access a portfolio line of credit
- Single stock and risk parity portfolios are available for clients with more than $100,000
At Wealthfront, you can create your initial account in roughly five minutes, take the initial questionnaire, and then view the recommended Core portfolio. To create your account, you input your name, email address, phone number, and password — no Social Security number is required to view proposed portfolios. After answering the goals, time period, and risk questions, Wealthfront recommends a Core portfolio aligned with your questionnaire responses. Well crafted, the Core Portfolio includes diverse US and international stock and bond ETFs along with a real estate ETF. You can also view other investment portfolio options before funding the account.
Wealthfront users need $500 to begin investing and the management fee is 0.25% of assets under management (AUM). No financial planners are available although the customer service representatives are well trained and have a minimum of Series 7 investment licenses. Users can augment or create new portfolios from a selection of 200+ ETFS and two Grayscale cryptocurrency funds. A standout feature at Wealthfront, available to all account holders who link additional financial accounts, is the Path digital financial planning tools that mimic a digital financial advisor in helping you take stock of your financial situation and goals.
M1 Finance differs from most robo-advisor competitors as the user chooses their own pre-made investment portfolio from more than 80 choices. As such, there’s no initial goals and risk questionnaire to complete. The signup process involves listing your level of investment experience and creating an account with the typical personal information. After choosing an account type, you link your bank and fund the account.
You need $100 to get started at M1 Finance and then the basic service is free. Additional features are available with M1 Plus for $125 per year. After funding the account, you can choose from one or more pre-made portfolios along with over 6,000 ETFs and stock investments. M1 doesn’t offer human financial advisors either, but does provide live week-day customer service and chat.
The onboarding process at both Wealthfront and M1 Finance is easy, Although if you’re seeking a digital financial planner and advice, then Wealthfront is the better choice.
M1 Finance, winner of our Best for Sophisticated Investors category, is appropriate for independent investors and, as such, doesn’t have the typical goal planning features available at Wealthfront and other digital investment advisors. M1 Finance is designed to automatically manage the portfolio you select, and it doesn’t deviate from that tightly defined function to offer any type of financial advice. An underlying assumption to the M1 Finance platform is that you know what you are doing and you don’t need anyone telling you otherwise.
In contrast, Wealthfront is the winner of our Best for Goal Planning. Users choose from among six goals such as retirement, college, and large purchase. Goal progress is automatically updated on your dashboard and you can also test out various goal-based scenarios with the Path digital financial planner. The Path software can answer more than 10,000 financial planning questions such as “can I take a year off for travel,” “when can I retire," and “how much do I need to save for my child’s college?”
The Path digital financial planner is available for free to anyone who creates an account at Wealthfront and provides comprehensive online financial planning advice similar to that of a human financial advisor. It uses the data from the external accounts you sync with the platform to better understand your finances and your goals for deeper insight that few digital investment advisors can match.
When it comes to goal planning, Wealthfront beats M1 Finance. That said, anyone can use the Path digital financial planner, so even those who prefer M1’s other features can benefit from Wealthfront’s planning tools.
Both M1 Finance and Wealthfront offer cash accounts with debit cards and lending. Auto-deposits are simple and straightforward for both platforms, as well as at most other robo-advisors. Finally, neither Wealthfront nor M1 Finance offer human financial advisors, and only Wealthfront offers any financial advice through its excellent Path tool.
Wealthfront Cash is a distinct offer from the firm and requires a separate signup. There are no minimums or fees associated with this high-yield checking account. Top features include goal-based saving, a fee-free ATM debit card, bill pay, and direct deposit. Wealthfront Borrow provides account holders with at least a $25,000 account value to borrow for low interest rates and without a credit check.
M1 Spend cash management comes in two varieties, with higher cash interest rates for M1 Plus users. The basic checking account includes and ATM debit card. M1 Plus customers receive the greatest benefit from M1 Spend with 1% cash back on the debit card, 1% interest paid on the cash account, and the ability to send checks. The Owners Rewards Credit Card offers Plus members the opportunity to earn up to 1% cash back for spending tied to companies invested in through M1.
M1 Borrow offers a loan for up to 40% of the account balance, once the amount invested exceeds $2,000. M1 Plus members benefit from lower margin rates.
Both Wealthfront and M1 offer cash management and borrowing. M1 Plus members must pay the $125 per year to get the greatest benefits from the cash management and borrowing, although borrowing only requires a $2,000 investment account balance. Wealthfront doesn’t charge fees for their interest-bearing cash account, although you’ll need $25,000 to borrow from your investment account. The differences between the two offerings are minimal and probably wouldn’t be a determining factor in deciding which platform to use.
M1 Finance and Wealthfront offer different paths to portfolio construction. Wealthfront’s investment portfolios, based upon modern portfolio theory, are individually tailored to the user and based upon their responses to the risk, financial goals, and time horizon questions. Wealthfront clients can customize the Core portfolios with ETFs or create new investment portfolios for the firm to manage. M1 customers choose from approximately 80 investment portfolios with varying weights of risky versus fixed assets.
Wealthfront’s Core portfolios include US and international stock and bond funds along with a commodity, a real estate investment trust (REIT), and emerging market bond ETF. Investors with more than $100,000 can opt for the risk parity portfolio which allocates capital across multiple asset classes and attempts to outperform a passive market-matching index fund portfolio. Accounts that top $500,000 can choose the smart beta, factor based portfolio.
All Wealthfront users can adjust their recommended portfolios by adding ETFs from a list of 200+ choices and several Grayscale cryptocurrency funds. Clients can also construct their own ETF portfolios and have Wealthfront manage them.
As mentioned, the separate fee-free Wealthfront Cash enables anyone to access a high-yield cash account with a debit card.
M1 Finance’s portfolio construction is best for investors with basic investment knowledge who can craft their own portfolio. The Expert Pies, M1 Finance’s term for the portfolios, are ideal for those seeking a premade retirement, growth stock, cannabis stock, high yield, or hedge-fund styled options. Users can stick with the Expert Pies or use the screeners to choose additional stocks and ETFs. The mix and match approach of M1 Finance’s portfolio construction options enable users to choose their assets and then receive automated rebalancing without a management fee.
Both Wealthfront and M1 Finance offer well-constructed portfolios. The decision between the two depends upon the level of customization you prefer. M1 Finance has the most customization, but also comes with the responsibility of selecting the best fit yourself. Wealthfront is not as customizable, but uses a questionnaire to ensure you are getting the right portfolio to achieve your stated goals.
Both Wealthfront and M1 Finance offer the basic account types, taxable and retirement accounts. Beyond that, there are some unique choices on each platform.
Wealthfront Account Types:
- Individual taxable
- Joint taxable
- Traditional individual retirement account (IRA)
- Roth IRA
- 401(k) rollover IRA
- Simplified employee pension (SEP) IRA
- 529 College saving plan
- High-interest cash
M1 Finance Account Types:
- Individual taxable
- Joint taxable
- Traditional IRA
- Roth IRA
- 401(k) rollover IRA
- SEP IRA
- Uniform Transfers to Minors Act (UTMA) accounts and Uniform Gifts to Minors Act (UTMA) accounts (both for M1 Plus clients only)
- High-interest cash
Most investors will be fine with the account options at either platform. Investors with less than $500 seeking a taxable brokerage account will likely lean towards M1 Finance out of necessity. Those seeking 529 college accounts will, of course, prefer Wealthfront, while those who want a UGMA/UTMA account, will lean towards M1 Finance. There is no clear winner for account types as both Wealthfront and M1 Finance have the commonly used accounts sprinkled with some rarer offerings.
|Socially Responsible or ESG Options||Yes||Yes|
Both platforms offer vast customization options. Wealthfront users have over 200 ETFs and two crypto funds available for customization. Wealthier investors can opt for single-stock diversification, risk parity, or smart beta portfolios.
M1 Finance surpasses Wealthfront in the customization contest with more than 6,000 ETFs and 80+ premade portfolio options. Users can leverage the Expert Pies with portfolios that span various investment styles like income, international, dividend, hedge fund, and growth strategies.
M1 Finance is the clear winner if you are looking for maximum portfolio customization.
Wealthfront monitors your portfolio daily and offers systematic rebalancing when there are big differences between your desired asset allocation and the target. After linking external accounts to the Path digital financial advisor, you can track your net worth and Wealthfront makes recommendations regarding spending, saving, and investing.
M1 Finance rebalancing occurs whenever you deposit or withdraw funds from the account. You can also digitally request rebalancing with a button click. The platform does not offer tax-loss harvesting, although withdrawals are structured in a tax aware fashion. Trading occurs during one morning window unless you opt for M1 Plus, which provides an afternoon trading window as well. The platform has no external account syncing or financial management tools.
At Wealthfront, taxable accounts are eligible for daily tax-loss harvesting. M1 Finance does not offer tax-loss harvesting, although when withdrawing funds, the firm sells assets in a tax efficient manner.
Overall, Wealthfront is ahead of M1 Finance when it comes to portfolio management with more systematic rebalancing and tax-loss harvesting features.
|Key Portfolio Management Features|
|Automatic Rebalancing||Monitored daily, rebalanced when allocations deviate significantly from target.||When money is deposited or withdrawn, and upon digital request.|
|Reporting Features||Statements, tax information. Goal progress viewable online.||Statements, tax information|
|Tax Loss Harvesting||Yes - daily||No|
|External Account Syncing/Consolidation||Yes - automatically updated. Not used in portfolio creation but for net worth, spending, and investment planning.||No|
M1 Finance and Wealthfront enable top-level financial institution-grade security protocols. Both also offer two-factor authentication. Cash Accounts are insured with the Federal Deposit Insurance Corporation (FDIC) while investment accounts carry Securities Investors Protection Corporation (SIPC) insurance on each platform. You can be confident your money is protected from malfeasance and institutional failure at both Wealthfront and M1 Finance.
When it comes to security, these platforms are evenly matched. It is worth noting that no investment platform protects your financial assets from the fluctuations inherent in the financial markets.
Both Wealthfront and M1 Finance offer a clean user interface, comprehensive FAQs, and an easy-to-navigate website. Most pages are accessible within one or two clicks from the home page.
Both Wealthfront and M1 Finance offer iOS and android apps. Each is generally well-regarded with functionality approximating that of the desktop version. Where Wealthfront climbs head is with the ability for anyone to access the Path digital financial planner, customer or not. This is a positive for the Wealthfront app.
Overall we found the user experiences on Wealthfront and M1 Finance to be difficult to compare. With M1 Finance you spend more time screening and building portfolios that will then be automated, while Wealthfront focuses on asking you questions and provides a less granular view of your portfolio but a wider view of all your finances. With two very different purposes behind the platforms, you end up with two very different user experiences.
Telephone, email, and FAQs and support search round out the customer service features at Wealthfront. No financial advisors are available, although the client service representatives are well-trained with a minimum of Series 7 and 66 investment licenses. Although the phone customer service number was somewhat difficult to find on the website, the phone representative was knowledgeable and helpful.
M1 Finance also offers phone, email, and FAQ Help Center assistance. There’s also an instant chatbot.
The platform's customer service options are comparable, although the Chatbot at M1 Finance puts them a notch ahead of Wealthfront. Neither service provides financial planner appointments like at SoFi, SigFig, Ellevest, or Betterment.
|Phone contact available||7am - 5pm PT week days||9am - 4pm ET week days|
|Pre-funding phone consultation with certified advisor||No||No|
|Online chat available||No||Yes-AI chatbot|
|Website FAQ section||Yes-Easy to access and comprehensive||Yes-Easy to access and comprehensive|
The investment management fee is 0.25% for assets under management. This fee applies to all investment accounts regardless of the portfolio value. Wealthfront Cash is fee-free.
M1 Finance doesn’t charge any portfolio management or trading fees for their basic product. M1 Plus costs $125 per year and offers interest on the cash account, a cash-back debit card, lower margin interest rates, a second afternoon trading window, and more features.
Additional fees include a $100 IRA termination fee and a $20 inactivity fee for accounts valued at less than $20 without trading activity for 90 days.
M1 Finance takes the win in the fee category with the fee-free investment management option.
|Management fees for $5,000 account||$12.50||$0.00|
|Management fees for $25,000 account||$62.50||$0.00|
|Management fees for $100,000 account||$250.00||$0.00|
|Termination fees||$0.00||$100 for outgoing transfers & IRA closures|
|Expense ratios||Average 0.08% to 0.11% for portfolios that include the Wealthfront Risk Parity Fund||Varies by investment|
The choice between Wealthfront and M1 Finance should be relatively straightforward as there are enough distinctions between the two to make selecting the right digital investment advisor easy. Intermediate to advanced investors who know what they want in an investment portfolio and are just looking for some portfolio automation in terms of rebalancing will appreciate the fee-free investment management at M1 Finance. With more than 6,000 stocks and ETFs along with 80+ premade portfolios M1 is in a good position to serve these do-it-yourself investors. This is why M1 Finance won our “Best for Low Costs” and “Best for Sophisticated Investors” designations. That said, it is best thought of as a bolt-on product that only provides the portfolio automation rather than a full digital investment advisor.
Wealthfront, in contrast, won our “Best Overall” and “Best for Goal Planning” robo-advisor categories and is as full-featured as any digital investment advisor out there. It is more involved than M1 Finance in that Wealthfront asks you questions and then suggests a portfolio that matches, and then goes on to manage it for you. The Path digital financial planner also syncs your external accounts to give you a full picture of your finances beyond your Wealthfront investment account. This makes Wealthfront an excellent choice for newer investors as opposed to M1 Finance’s DIY approach. Moreover, investors who want tax-loss harvesting and are comfortable with a well-managed investment portfolio with the option to add in specific ETFs will also lean toward Wealthfront. There is even something for wealthier investors with niche portfolios like risk parity and smart beta options.
M1 Finance is automated portfolio management for free, and that is hard to beat if that is all you want. Wealthfront is a much more comprehensive platform with something for everyone, and it is probably the place to start if you aren’t sure what you want or need in a digital investment advisor.
Frequently Asked Questions
Is Wealthfront Better Than M1?
Each platform will be best for a specific investor. Assess what you’re seeking in a digital investment manager to decide which is best for you. If you want to trade stocks or largely pick your own portfolio while leveraging automated rebalancing, then M1 Finance is the best match. You’ll also choose M1 Finance if you want free investment management with a low $100 minimum. An account with M1 Finance is not that different from a traditional brokerage account where you make all the investment decisions, so it is aimed at the investors who are comfortable with that but still want to eliminate the headaches of actively managing the portfolio in terms of regular rebalancing to maintain asset allocations.
Wealthfront is also the best choice if you are seeking a comprehensive digital investment manager that will recommend a portfolio and give you goal planning support. Wealthfront is also best if you’re seeking tax-loss harvesting and are willing to give up some of the customization M1 Finance provides. That is not to say that Wealthfront isn’t customizable, as it gives you the opportunity to customize with crypto funds and additional ETFs. It is just not as customizable as M1 Finance.
Can I lose Money on M1 Finance?
Yes. You can be exposed to declining prices or a declining market whenever you invest in financial markets, including stocks, ETFs, and robo-advisor portfolios. This applies to M1 Finance, Wealthfront and all other financial investment firms, including traditional ones with human investment managers. History has shown that if you do not sell your investments after price declines, values usually rebound over time. Of course, that doesn’t help the retiree if their retirement portfolio runs into a recession right before they start withdrawing. However, it is important to remember that most market portfolios have a much higher average annual returns than the same money held in banks.
Is M1 Finance a Robo-Advisor?
M1 Finance is really only a robo-advisor in the traditional sense. When robo-advisors began to emerge, the main feature they offered was automated portfolio management without human intervention. This means they did the boring tasks of buying and selling assets so that the overall allocations of a given portfolio were respected (AKA rebalancing). This is still all M1 Finance really does, but what we mean when we say robo-advisor has evolved.
In fact, digital investment advisor is now the preferred term rather than robo-advisor and these services are now expected to provide automated, algorithm-driven financial planning services. This means a robo-advisor today will ask you questions about your finances and goals and actively recommend a portfolio. Many will also help monitor goals within and outside the platform. The rebalancing of the recommended portfolio is just a small part of the overall service. So maybe the easiest answer is that M1 Finance is a robo-advisor, but it is not a digital investment advisor.
Our mission at Investopedia is to provide investors with reviews and ratings of robo-advisors that are comprehensive and unbiased. Our team of researchers and expert writers, led by Michael Sacchitello, spent months evaluating all aspects of a robo-advisor’s platform, including the account setup process, goal planning tools, account service options, portfolio construction offerings, portfolio management, mobile and desktop user experience, educational content, fees, and security. As part of this evaluation, we extract critical data points that are weighted by our quantitative model that produces a powerful star-scoring system.
With the individual investor in mind, we’ve designed a comprehensive ranking methodology to find the best overall robo-advisors and the best robo-advisors across nine key categories. Each advisor is then scored across multiple variables to rate performance in every applicable category. The score for the overall award is a weighted average of the categories.
Dotdash Meredith receives cash compensation from Wealthfront Advisers LLC (“Wealthfront Advisers”) for each new client that applies for a Wealthfront Automated Investing Account through our links. This creates an incentive that results in a material conflict of interest. Dotdash Meredith is not a Wealthfront Advisers client, and this is a paid endorsement. More information is available via our links to Wealthfront Advisers
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